BNP Paribas improves its results in the 1st quarter and strives for a “solid trajectory” in 2022, company news

PARIS (Agefi-Dow Jones) – BNP Paribas on Tuesday published better-than-expected results for the first quarter after a sharp rise in activity, especially in the financial markets.

Last quarter, the bank’s net profit rose 19% to 2.11 billion euros. This result includes a reduction in bad debt reserves, which confirms the normalization of the economic environment after the health crisis. Excluding exceptional items, the increase in profit compared to the first quarter of 2021 is even 34%, given the significant increase in capital in real estate, recorded a year ago.

The cost of risk, which measures bad debts, has halved to 20 basis points on outstanding loans, helped by the cancellation of reserves at BankWest’s subsidiary, which is being sold. Excluding reversals, the cost of risk is also low – 30 basis points against 42 basis points a year earlier.

Net banking income (NBI) for the quarter amounted to 13.22 billion euros, which is 11.7% more than in the first quarter of 2021. At constant exchange rates and the perimeter of growth reached 10.4%.

According to FactSet, analysts on average expected a net profit of 1.37 billion euros and revenue of 11.65 billion euros. Shares of BNP Paribas rose 4% to 50.76 euros at a session in Paris on Tuesday in response to the publication.

“Dynamics at the beginning of the year (…) are good and maintain a solid trajectory until 2022 in an environment that is, nevertheless, more contrasting in the short term,” the group said in a press release.

Strong growth of market activity

The main driver of the first quarter was corporate and investment banking (CIB), which gained market share and its NBI grew 28% in one year. Market activity (Global Markets) increased by 53%, caused by “very strong customer demand in the markets of interest rates, currency and commodity derivatives”, – said in a statement. However, global banking advisory services fell by 0.8% at constant scales and exchange rates in a less active market environment.

These results allowed the CIB to double its quarterly result to 1.35 billion euros.

Retail banking (commercial, personal banking and services) in the first quarter showed revenue of 8.1% at constant scales and exchange rates. The division benefited from a significant increase in its specialized activities, such as consumer loans and rental of professional vehicles (Arval), as well as a 4.8% increase in outstanding loans and an 8.2% increase in deposits. In France, the NBI grew by 8.9%, thanks to interest income of more than 6% and commissions of 12%.

The strength of the bank’s net income allowed the group to significantly exceed market expectations this quarter, comment Flora Bokahut and Theo Massing, Jefferies analysts. Revenue was better than expected in market operations, but all divisions exceeded expectations, reflecting broad strength, according to a note from the US bank.

The only quarterly decline is the CET1 capital ratio fell to 12.4% at the end of March from 12.9% at the end of 2021. markets after the war in Ukraine.

Low level of influence on Ukraine

As early as March, BNP Paribas indicated that Ukraine and Russia accounted for less than 0.2% of its financial liabilities (€ 3 billion). Faced with the conflict, the group decided to depreciate by 90% the value of its majority stake in its Ukrainian subsidiary Ukrsibbank by 159 million euros, which is an indicator for the first quarter. UkrSibbank still provides basic services in Ukraine, but since the beginning of the war it has closed dozens of branches and ceased its activities in the territories occupied by the Russian army. The group noted that it took care of the placement of more than 1,700 people among Ukrainian workers and their families.

BNP has also suspended new funding in Russia, and its local subsidiary BNP Paribas ZAO has not processed customer transactions since March.

The war in Ukraine forced the group to postpone the presentation day for investors, scheduled for March. The continuation of the war now makes it unlikely that this event will be organized before the summer. However, on Tuesday the bank confirmed the goals of its strategic plan for 2025, presented at the beginning of the year.

-Thomas Varela, Agefi-Do Jones; +331 41 27 47 99; [email protected] order: VLV – ECH

(Valerie Wenk participated in this article.)

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May 3, 2022 10:00 AM ET (14:00 GMT)